RightNow, of Bozeman, Mont., is not the first on demand software company to take a vertical approach to development. Oracles Siebel On Demand, for example, provides software for a number of verticals including automotive, high tech, wealth management, insurance and life sciences. But other SAAS [Software as a Service] vendorsSalesforce.com, NetSuite, Microsoft and most recently SAPare taking the platform approach to on demand applications.

Click here to read more about recent upgrades of CRM software from Oracle and RightNow Technologies.
Each vendor offers an underlying applications platform (and in Salesforces case an on demand development language) that lets customers and independent software vendors develop add-on applications that are, in many cases, industry specific.
The question is which approachindustry specific or platformworks best for users? The short answer: It depends on which industry youre in, according to AMR Research analyst Rob Bois.
Bois released a report Wednesday predicting that CRM (customer relationship management) spending will increase 16 percent in 2008 to nearly $2,200 per employee, with mid-market companies seeing the greatest spending increase, at nearly 22 percent.
The bottom line, according to AMR: While the appeal of SAAS is growing and impacting the industry average for upgrade rates, as much as 65 percent of companies now upgrade at least once a year.
To read about why Oracles Larry Ellison believes SAAS doesnt pay, click here.
CRM failure rates remain far too high. According to AMR 29 percent of companies reported an implementation failure. At the same time user adoption remains a challenge, with 33 percent to 47 percent of CRM applications facing "serious adoption issues." At the same time 25 percent of all CRM licenses remain unused.
"There is an interesting paradox going on in CRM right now," said Bois. "Spending has reached an all-time high, with expectations nearly as lofty. But implementation failure rates have not improved, nor have ROI [return on investment] metrics. Both buyers and vendors need to figure out how to close this gap soon or were just going to repeat the same mistakes made in the late 1990s all over again."
On the question of whether or not a vertical or platform approach could make a difference in adoption and failure rates, Bois said the real question is not whether SAAS companies should offer vertically oriented applications, but whether they should develop their own industry-specific functionality or look to partners for vertical expertise.
"Ultimately customers are going to be better off if the software vendor does verticalization itself," said Bois. "They have more management and control over the customer experiencethe customer being the software buyerand one of the real benefits of SAAS is a constant monitoring of services, and a constant feedback loop. The tighter vendors and customers are aligned the better."
However, theres a caveat to the equation, according to Bois. "If its a niche industry the partner approach is much better," he said. "The partner is going to be much more closely aligned" with niche industry processes.
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